Leslie’s Notebook

Prior to the merger of Texaco and Chevron in 2000, the two majors “were fighting for dead last in the exploration sweepstakes, in terms of money in and results out,” according to Gary Luquette, head of Chevron North America E&P.

Speaking to a group of service company executives in Houston, he said a lot more positive things are going on now and the company has, in the past two years, risen to the top.

“Some of that is because we expanded our process of evaluation and we went to doing a global ranking of our basins.”

At the moment the company has many major capital projects moving out of the FEED stage (front end engineering and design) and into actual construction and production. “But I realize we are just an independent compared to ExxonMobil,” he joked.

“We are growing the value of the base business. We have a huge inventory of legacy assets around the world. We lead the industry in capital projects. We are re-investing at a rate at least 20% higher than the next closest competitor, relative to our market size. We want to capture new opportunities in emerging basins.

“We continue to hunt for elephants and search for new legacy positions.”

This year Chevron will spend about $17 billion in the upstream part of its business, with about $5.7 billion of that in North America. Production is approaching 3 million barrels per day. 

There are many challenges, he said, including rising service and labor costs, limited access to acreage and geopolitical risks. In particular, Canada and Alaska are challenging regions, ”so we have some plans to either become material there, or get out.” The company has about 200 employees in Calgary.

In the Gulf of Mexico, Chevron is a leader, especially now that its deepwater Jack find in the Lower Tertiary trend has opened up a whole new play that could end up being the largest in the Gulf.  The company has two new ultra-deepwater ships on order so it can expand its drilling and development.

“But everybody is trying to grow their volumes and this is testing the capacity of the service and supply industry,” he said.

–Leslie Haines, Editor-in-chief, Oil and Gas Investor, lhaines@hartenergy.com

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